Obtaining a mortgage can seem overwhelming and even perhaps even confusing, particularly if you are a first home buyer. Often, there is jargon and terms used that you may not have heard of before. We explain below five of the common terms and definitions used in home loans, mortgages and business finances:
‘Principal’ is the amount of money you borrow from a Lender when you take out a home loan, mortgage or other finance.
‘Interest’ is the fee the Lender charges you for the use of their money. The interest charge on your loan depends on the amount of money you borrow, the interest rate and the term of the loan.
‘Term’ is the agreed period you have to repay your loan. For some loans, this could be a year or less, while for most home loans it is between 25-30 years.
‘Loan Repayments’ refers to the regular payments you make over the term of your loan. These are typically monthly and generally cover the interest charge and a portion of the principal.
This term might sound scary but it’s just another way to describe the repayment of your debt. Over the term of the loan, your regular payments are said to ‘amortise’ the loan.
Still stuck? If you find terms that you don’t understand or you would like some clarity don’t hesitate to reach out – Contact Us